ARTS, CAPITAL AND THE LONG DEFEAT — Part 1 of 3 The Philanthropy Illusion

The 2026 Budget delivered nothing for the arts. The government thinks philanthropy will fill the gap. It won’t.

I’ve spent the past week in a series of conversations - with artists, with sector leaders, with people thinking about philanthropy and civil society. I’ve also been reading widely, borrowing from conversations in global health and international development because I think the questions being asked there about how we fund, what we fund, and who bears the risk of transformation are exactly the questions the arts sector needs to be asking.

I believe arts and culture are part of civil society-  not adjacent to it, not a decorative addition to it, but a core expression of it. The problems showing up in arts funding are not arts problems. They are civil society problems, wearing arts clothing. This is the first of three pieces that attempt to bring those conversations together.

The budget that wasn’t

The 2026 Federal Budget contained one arts-specific measure: $23 million over three years to repair the National Maritime Museum’s wharves, help the National Film and Sound Archive store old film stock, and prepare Old Parliament House for its centenary. That was it. Out of $830 billion in total spending, the arts received a maintenance line item dressed up as a budget measure.

Overall spending on arts and cultural heritage is expected to sit at roughly $2.3 billion per year through to the end of the decade - flat, in a context where flat means going backwards. The Australia Institute’s analysis was blunt: if artists, music festivals, museums, venues, companies, musicians and other creative workers were looking for a helping hand, they haven’t found one here.

The trajectory has been clear for years. A New Approach’s Big Picture data shows that while headline government expenditure on arts and culture reached $8.6 billion in 2023–24 across all three levels of government, per capita recurrent spending has declined 14% since 2007–08. Capital expenditure - buildings, renovations, restorations - now absorbs 18% of total cultural spending, up from 11%. More money going to concrete. Less to the people, programs and organisations that give those buildings purpose.

In real terms, governments spent $551 million less in 2023–24 than in 2021–22. Arts employment took almost five years to recover from COVID;  three times longer than the rest of the economy; and has been either stagnant or declining since 2008–09. The sector is not in a downturn. It is in a structural reconfiguration that no one in government seems willing to recognise.

The philanthropy pivot

Into that silence, the government has offered a single word: philanthropy.

Labor’s special envoy for the arts, Susan Templeman, has called philanthropy “critical” for the sector and is chairing a parliamentary inquiry into arts and cultural philanthropy. The framing is clear: private giving is positioned as the mechanism that will close the gap between what government is willing to spend and what the sector needs to survive.

But the arithmetic undermines the argument. Total philanthropic donations to organisations advancing culture in 2021 amounted to $204 million, or $238 million adjusted for inflation. Government recurrent spending on arts and culture in 2023–24 was nearly thirty times that figure. The reduction in government spending between 2021–22 and 2023–24 — that single two-year decline - was more than double the entire annual value of cultural philanthropy.

Philanthropy cannot substitute for public investment at this scale. The suggestion that it might is not a policy position. It is an abdication dressed as a strategy.

This is not an argument against philanthropy. Private giving matters:  for risk capital, for experimentation, for the kinds of investment that government structures are poorly designed to support. But when the burden of keeping an entire ecology alive is quietly transferred from the public purse to private generosity, what is really being transferred is responsibility without accountability. Philanthropic giving is voluntary, uneven in its geographic and artform distribution, and subject to the preferences and tax circumstances of individual donors. It is a complement to public investment. It is not a substitute, and a government that treats it as one is making a choice to let the sector contract while appearing to care about it.

What investment can do (and what it can’t)

If government has retreated and philanthropy can’t fill the gap, could investment - repayable finance, impact capital - play a larger role?

There is evidence worth taking seriously. Figurative, the UK-based organisation that launched the world’s first impact investment fund dedicated to arts and culture in 2015, recently published a decade of data from its Arts Impact Fund. Among the 25 organisations in their portfolio, the proportion showing improved earned income rose from 57% to 71%. Net current assets improved from 54% to 67%. Fixed assets remained strong at 83%. But the most telling indicator moved in the wrong direction. Cash reserves declined, from 55% to 50%. After weathering the pandemic, arts organisations have been contending with inflationary pressures, rising operating costs, and audiences slow to return. Reserves have been drawn down, and rebuilding them remains a work in progress.

Figurative is honest about the limitations: a small portfolio, no counterfactual, imperfect data quality. They share it not to claim that lending solves resilience, but because the sector needs a more honest, tracked and evidence-based conversation about what financial resilience actually means, rather than treating it as an abstract policy objective that everyone invokes and no one measures.

Honesty matters, and it also reveals the outline of a deeper problem. Every form of capital flowing into the arts: government, philanthropic, and now investment, is structured around the same assumption: that the organisation’s job is to persist. To maintain itself as a going concern, grow its income, diversify its revenue, and demonstrate impact in terms that justify continued support. The entire architecture incentivises continuation, even when continuation has become unsustainable.

Which raises a question that this piece cannot answer alone, but that the next piece in this series will address directly: what if the problem is not how much money is in the system, but what the money is structured to do? And what if the concept that sits most comfortably at the centre of every funding conversation - scale - is not just the wrong goal, but structurally incompatible with the work?

Next in this series: “The Myth of Scale” — on why the social sector’s most unexamined virtue is the arts sector’s most destructive demand.

This article draws on analysis from The Point / Australia Institute (Budget 2026), Figurative (Arts Impact Fund resilience data), A New Approach (Big Picture policy brief 2026), and the REGENERATE white paper on transition infrastructure for the Australian arts sector (Lieberman, March 2026).